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Wednesday, December 5, 2018

December Crypto Outlook: What Next After November Carnage?

In October, cryptocurrencies had the least volatile month of the year. In what turned out to be a calm before the storm, their prices crashed in the following month. The price of Bitcoin, Ethereum, and Ripple declined by 35%, 42%, and 19% respectively. The combined market capitalization of the cryptocurrencies declined from $235 billion to below $130 billion in the month.

December has started with the currencies in the red. As of 4 th December, the currencies have declined by 7.2%, 8.10%, and 6.0%. Year-to-date, the currencies have lost more than 80% of their value.

This article will look at some of the key things to look at as the year comes to an end.

Low Sentiment
Sentiment is the main driver of all asset classes. In stocks, investors tend to crowd shares of companies they believe will show increased growth. The same is true with the cryptocurrencies industry. In 2017, as prices continued to move up, investors from around the world rushed to invest. They did so, not because of the intrinsic value they believed was in the currencies but because of the fear of missing out (FOMO). The crowding of the industry created increased demand, which pushed prices higher.

This year, as the price of the currencies started to drop, weary investors started to exit their positions. This created more sellers than buyers, which led the price to continue dropping. This was not helped by the series of negative news that rocked the industry. This included hackings, the ban of marketing by Google, Facebook, and Twitter, and the regulatory uncertainties among others.

The decline that happened in November was mostly because of the loss of confidence in the industry after a disagreement between Bitcoin miners and software owners led to a hard fork. This created a new currency known as Bitcoin Cash SV. Investors were worried about the future disagreements and the potential for dilution. This low sentiment could lead to continued downward pressure.

Technicals
With the price of cryptocurrencies being very low, some analysts believe that an upward trend could happen because of technical factors. A quick look at the major currencies using technical indicators reveals that they are oversold. For example, on the yearly chart, the RSI of Bitcoin is at 29 while that of Ethereum is at 27. This combined with the low mining activities could lead to a rise in the prices.

There is also the fact that the year is coming to an end, which could lead to many investors to buy the currencies with the hope of a recovery in the new year.

Top Events
This month, a number of cryptocurrencies-related events will take place. Traders watch out for these events with the hope that important news could come from them. On December 11, cryptocurrency enthusiasts will meet at Atlanta for the Atlanta Blockchain Experience. This week, 3rd Annual Blockchain Opportunity Summit will take place in New York. Another important event will be the VIP event by Adventure Capital. In Israel, the NextBlock Conference will take place in Tel Aviv on December 11. This is an important event because Israel has recently emerged as a leader in the blockchain technology. On Dec 14th, The Next Web and eToro will host the Hard Fork Decentralized in London, where speakers will include top executives and policymakers.

At Contentworks, our team of financial professionals closely follows market movements for FX, Crypto and other tradable instruments. We are proud to serve some of the biggest crypto and fintech companies in the world by delivering high-impact articles, videos, PR and white papers.
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